6 - Asset Management, Wealth Management, and Research

Abstract

Asset Management refers to the professional management of investment funds for individuals, families, and institutions. Asset Management products are offered through separately managed accounts and through commingled vehicles such as mutual funds and private investment funds. Invested funds are generally lumped into the following categories when placed in Asset Management accounts at an investment bank: fixed income, equity, alternative investments (comprising principally of hedge fund, private equity, and real estate investments), and money market. Fund performance is a key metric when evaluating Asset Management capabilities. Investors measure this by relying on different performance measurement firms, such as Morningstar and Lipper, who compile aggregate industry data that demonstrate how individual mutual funds perform against both indexes and peer groups over time. Most major investment banks have large hedge funds housed within their Asset Management Division. These funds are managed principally for the benefit of investing clients although the bank and employees of the bank may also invest in the fund and are separate from the proprietary investing activities conducted within the Trading Division which invests solely for the account of the firm, without any outside client investments. Additionally, research is provided by all large investment banking firms to selected institutional and individual investing clients on a global basis. This research usually covers equity, fixed income, currency, and commodity markets. Research professionals also focus on economics, portfolio strategy, derivatives, and credit issues, offering insights and ideas based on fundamental research.